Digital Video Headends & Distribution Hubs: The Electronic Gold Rush Begins

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Digital Video Headends & Distribution Hubs: The Electronic Gold Rush Begins

Service: Multimedia Broadband Services & Infrastructure
Report Number: IN0502140MB
Publication Date: May 2005
Number of Pages: 121
Report Price: $3,995 U.S. Dollars
Analyst: Gerry Kaufhold

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Abstract
Building new Digital Video Headends and upgrading existing facilities will reinvigorate the business of many major telecommunications equipment manufacturers.

Internet Protocol enables Cable TV, IP-TV, Digital Terrestrial TV and Digital Satellite services to extend their brand beyond consumer’s TV sets. The winners in this market will be those who can keep their “brand name” in front of consumers at home, at work, at play, on vacation, in transit, and even when they are temporarily away from the main service provider’s service area.

The power of Gigabit Ethernet is that “GigE” makes it easy for a digital TV service operator to segment its large systems into distinct “zones of operation” that permit a single headend to provide “customized” video programming services that have unique programming choices for each zone.

We expect the value of various categories of Digital Video Headends, and their GigE and Internet Protocol components, to surge past US$ 2.6 Billion by 2009. Compared with indicators from other telecommunications segments, a CAGR of 32.3% is astounding!

Table of Contents

Executive Summary
- Forget the Triple Play, and Four-Play, We Now Have “Multi-Play”
- TV Services Need To Extend Their Brand To Broadband And Wireless
- Legacy “Silos” Of Video, Data and Voice Converging Onto GigE
- “Zones Of Operation” Help Bring Personalized Video, Voice, Data, Mobile, and Other Services To Subscribers On A Budget
  - High Definition TV and “On Demand” Services Complicate The Bandwidth Issues
Methodology
- Methodology
Electronic Entertainment Dynamics
- "Content" Is King
- "Content" Owners Are Now Tracking Usage Activities All The Way To End Users
  - Digital Rights Management Is Becoming A Key Log-Jam
  - "Content" Delivery Spans Multiple Formats And Technologies
  - Service Providers Need To Support A Wide Range Of Services, From High Definition TV To Broadband TV To Mobile TV
- Four Major Groups Of "Final Mile" Video Delivery Networks
  - Three One-Way TV Delivery Services
  - Three Major Two-Way Broadband Video Delivery Services
  - The Internet Provides A “Wild Card” TV Delivery Service
    - Internet Protocol (IP) Is Moving Into TV Network Cores
- Forecast For Growth Of "Final Mile" Services
- Providing HDTV-to-Cell Phone Video Is Complex
Internet Protocol Provides A Scalable, Converged Network
- New IPTV Services Benefit From What Cable Companies Have Learned
- Internet Protocol And Gigabit Ethernet Are The Foundation Of “Multiple Play” Services
- Gigabit Ethernet Equipment Has A Bright Future Ahead In The Video Entertainment Industry
Five Key Trends In The Consumer Digital Video Network Industry
- Trend One
  - Forget the Triple Play, and Four-Play, We now have “Multi-Play”
- Trend Two
- Trend Three
- Trend Four - Adlink
- Trend Five
Digital Video Headends – Trade-Offs, Compromises, And Complexities
- High Definition, "Content" On Demand, Interactive TV, And New Service Offerings Continue To Redefine The Problem
- The Cable Industry Has “Multi-Play” Advantages
- Satellite Services Have Global Opportunities
- Telephone Companies Have A Great Deal To Think About
  - Major Telephone Company Video Services Must Be Compelling
- Digital Terrestrial Services Can Provide “Multi-Play,” Too
- Broadband Video Services Will Also Find A Place To Play
- Mobile Video Services Will Interconnect Back To “All Of The Above” Infrastructures And Create New Service Models
Making It All Work Is Not Trivial
- Corporate Networks Deliver “Multi-Play” Services Already
  - Corporate Networks Can Be Managed More Closely Than Consumer Networks
  - Channel Surfing Is Not An Issue For Corporate Networks
- Bandwidth Is Not Infinite
  - Switched Services Can Help Optimize The Use Of Bandwidth
    - IP-Based “Multi-Play” Networks Efficiently Support Switched Connections
    - Multicasting Of Most Popular "Content" Saves Bandwidth
- Impediments Inherent In An Internet Protocol Network
  - Connection Stability
  - Latency
  - Jitter
  - Throughput And Quality Of Service (QoS)
  - Protection – Security, Encryption, And Conditional Access
  - Lost or Dropped Packets Require Forward Error Correction
  - Reordering of Packets During Transport
- Voice Services Are Sensitive To Latency
- Video Services Are Sensitive To Jitter And Packet Loss
  - Program Clock Reference (PCR) Timing Must Be Maintained
- The Media Delivery Index (MDI™) Proposal For IP Network Video Quality From IneoQuest
  - Delay Factor (DF) Portion Of The MDI™
  - Media Loss Rate (MLR) Portion Of The MDI™
  - MDI™ Gaining Support From Equipment Manufacturers
  - More About IneoQuest 32
    - IneoQuest’s Tag Line Is “Get The Picture™”
      - Re-Configurable Testing Platform Is Based On FPGAs
Equipment Value Forecasts
- Four Major Categories Of Headend Equipment
- Super Headends – The “Nerve Center” Of The Metropolitan Area Entertainment Network
  - Value Of Outfitting New Super Headends, By Region
  - Value Of Upgrades To Existing Super Headends, By Region
  - Value Of New And Upgraded Super Headends, By Region
- Local Headends – Providing Remote Control, Local Insertion And Error Recovery
  - Local Headends Used For IPTV And Cable TV Services
    - Local Headends Also Can Provide Traditional Analog Channels
  - Value Of Outfitting New Local Headends
  - Value Of Upgrading Existing Local Headends
    - Cable TV Headends Adding Gigabit Ethernet, MPEG-4 And VC-1
  - Value Of New And Upgraded Local Headends, By Region
- Local IPTV Distribution Hubs
  - For IPTV Services This is Where All IP Streams Are Aggregated, Manipulated And Managed
    - Multicasting Of Popular Channels Provides Fast “ChannelSurfing”
    - Video Edge Routers Connect To DSLAMs And Other IPTV Interfaces
    - IPTV Distribution Hubs May Be More Efficient Than Cable QAMs
  - Value Of Outfitting New IPTV Distribution Hubs
  - Value Of Upgrading Existing IPTV Distribution Hubs
  - Value Of New And Upgraded IPTV Distribution Hubs
- QAMs Used in Cable TV Distribution Hubs
  - QAM Deployment Faces A Variety Of Complicating Issues
    - Big Band Networks Presentations At SCTE - "Switched Broadcast" May Limit Number Of Total QAMs Needed By Cable Systems
    - Personal Video Recorders May Mitigate The Need For More QAMs
    - Media Gateway Set Top Boxes With Hard Disks Versus QAM Channels
  - DOCSISÒ 3.0 - Modular CMTS And Wideband Services
    - Wideband Cable Modems May Deliver Video-Over-IP
  - Value Of QAMs Used In New Cable TV Distribution Hubs
    - Typical Annual Cost Per QAM Distribution Hub By Region
  - Value Of QAMs For Upgrading Cable TV Distribution Hubs
  - Value Of New And Upgraded QAM Cable TV Distribution Hubs, By Region
Worldwide Summary By Category
Summaries By Category, By Region
- North American Value By Category
- European Value By Category
- Asian Value By Category
- ROW Value By Category
- Total Value Of Each Region And Worldwide Summary
Further Discussion - What Comes Next?
- Neighborhood Nodes – “Micro” Headends
  - Still “Pass Through” Traditional Analog Channels
  - Capable Of Re-Multiplexing, Modulating, And Up Converting
  - Broadcast On Demand, Video-On-Demand, And Voice Services
  - Neighborhood Nodes Being Considered For Fiber-To-The Neighborhood
- In-Home Network Servers – Pico-Headends
- Final And Important Note – This Approach Will Also Work For IPTV And Other Services
- Completing The Circle –Mobile Video Services To Flow From The Super Headend Through Cell Phone Infrastructure To Portable Devices
- Corporate Multiple Play Converged Services Can Also Benefit From This Approach
- Companies In This Space Will Continue To Have Expanding Opportunities
Cisco Systems
- Cisco Has Been A Key Driver Of IPTV For Many Years
- Cisco Multiservice Transport And Service Control Platforms
- Cisco IP Includes Voice, Video, High Speed Data And QAM
  - QAM Integration With Cisco’s uMG9850 QAM Module
- Cisco Systems Is Empowering The Connected Consumer
  - Cisco Systems Enables All Of The IP Networks
    - IP and Ethernet – Intelligence, Flexibility and Adaptability – Drive Up ARPU
  - Any Service, To Any Device, To Anywhere
- Cisco Systems Pioneering Next Generation Networks (NGN)
  - Cisco Is Driving Towards Intelligent IP Networks
  - Cisco’s Involvement With DOCSIS® 3.0 Will Drive NGN Forward
C-COR, Incorporated
Harris Broadcast Communications – A Division Of Harris Corporation
Lucent Technologies
Juniper Networks, Inc.
TANDBERG Television ASA
Alcatel – World Leader For DSL
Microsoft
HP Has An Entire Ecosystem Of Customers, Partners And Support
Ascent Media Group, Inc.
ARRIS Group, Inc.
Telcordia
Scopus - Intelligent Video Network™
SkyStream Networks, Inc.
BigBand Networks
Harmonic
Terayon Communication Systems
Tut Systems
Nortel Networks Corporation
ETI Telecom
Net Insight AB
Scientific Atlanta - A Global Leader
Motorola Broadband
Path 1 Network Technologies Inc.
Thomson - International Powerhouse
Video Encoding Specialists
- Winnov - New Xstream Engine 2
- Modulus Video - The MPEG-4 Experts
- Main Concept
- EGT
- Optibase, Ltd.
- RGB Networks
- Envivio
Video Server Manufacturers
- BitBand
  - BitBand MaestroÔ Content Distribution and Video network Management Suite
  - BitBand's Approach Supports Flexibility For Business Managers, Too!
  - BitBand VisionÔ Appliance Servers
- Entone Technologies
  - Entone's StreamLinerÔ Network Video Recorder (NVR)
  - Entone's Encoding StudioÔ Runs On HP And IBM Off-The-Shelf Servers
- Arroyo
- Broadbus
- Kasenna - The Business Of Television
  - Kasenna MediaBase Ported To 64-Bit Processing For Breakthrough Performance
  - VFusionÔ Video Network Management Software
  - Kasenna's Products Enhance The Business Opportunities Of VOD Services

List of Tables

Table 1. Summary Of Worldwide Value Of Equipment In Digital Video Headends (annual value, US$ millions, annual growth, Compound Annual Growth Rate)
Table 2. Number Of New Super Headends Built, By Year, By Region (number in units, annual growth, percent of total, Compound Annual Growth Rate)
Table 3. Typical Cost To Outfit New Super Headends, By Region (US$M, annual growth, percent of worldwide total, CAGR)
Table 4. Annual Value Of Newly Built Super Headends, By Region (US$ M, annual growth, percent of worldwide total, CAGR)
Table 5. Number Of Super Headends Upgraded, By Year, By Region (number in units, annual growth, percent of total, Compound Annual Growth Rate)
Table 6. Typical Cost To Upgrade Existing Super Headends, By Region (US$M, annual growth, percent of worldwide total, CAGR)
Table 7. Annual Value Of Upgraded Super Headends, By Region (US$ M, annual growth, percent of worldwide total, CAGR)
Table 8. Annual Value Of New And Upgraded Super Headends, By Region (US$ M, annual growth, percent of worldwide total, CAGR)
Table 9. Number Of New Local Headends Built, By Year, By Region (number in units, annual growth, percent of total, Compound Annual Growth Rate)
Table 10. Typical Cost To Outfit New Local Headends, By Region (US$M, annual growth, percent of worldwide total, CAGR)
Table 11. Annual Value Of Outfitting Newly Built Local Headends, By Region (US$ M, annual growth, percent of worldwide total, CAGR)
Table 12. Number Of Local Headends Upgraded, By Year, By Region (number in units, annual growth, percent of total, Compound Annual Growth Rate)
Table 13. Typical Cost To Upgrade Existing Local Headends, By Region (US$M, annual growth, percent of worldwide total, CAGR)
Table 14. Annual Value Of Upgraded Local Headends, By Region (US$ M, annual growth, percent of worldwide total, CAGR)
Table 15. Annual Value Of New And Upgraded Local Headends, By Region (US$ M, annual growth, percent of worldwide total, CAGR)
Table 16. Number Of New IPTV Distribution Hubs Built, By Year, By Region (number in units, annual growth, percent of total, Compound Annual Growth Rate)
Table 17. Typical Cost To Outfit New IPTV Distribution Hubs, By Region (US$M, annual growth, percent of worldwide total, CAGR)
Table 18. Annual Value Of Outfitting Newly Built IPTV Distribution Hubs, By Region (US$ M, annual growth, percent of worldwide total, CAGR)
Table 19. Number Of IPTV Distribution Hubs Upgraded, By Year, By Region (number in units, annual growth, percent of total, Compound Annual Growth Rate)
Table 20. Typical Cost To Upgrade IPTV Distribution Hubs, By Region (US$M, annual growth, percent of worldwide total, CAGR)
Table 21. Annual Value Of Upgraded IPTV Distribution Hubs, By Region (US$ M, annual growth, percent of worldwide total, CAGR)
Table 22. Annual Value Of New And Upgraded IPTV Distribution Hubs, By Region (US$ M, annual growth, percent of worldwide total, CAGR)
Table 23. Number Of New Cable TV Distribution Hubs Built, By Year, By Region (number in units, annual growth, percent of total, Compound Annual Growth Rate)
Table 24. Typical Cost Per New Cable TV QAM Distribution Hub – North America (Broadcast QAMs, On-Demand QAMs, Data QAMs, annual value per hub)
Table 25. Typical Cost Per New Cable TV QAM Distribution Hub – Europe (Broadcast QAMs, On-Demand QAMs, Data QAMs, annual value per hub)
Table 26. Typical Cost Per New Cable TV QAM Distribution Hub – Asia (Broadcast QAMs, On-Demand QAMs, Data QAMs, annual value per hub)
Table 27. Typical Cost Per New Cable TV QAM Distribution Hub – Asia (Broadcast QAMs, On-Demand QAMs, Data QAMs, annual value per hub)
Table 28. Typical Cost To Outfit New Cable TV QAM Distribution Hubs, By Region (US$M, annual growth, percent of worldwide total, CAGR)
Table 29. Annual Value Of Outfitting New Cable TV QAM Distribution Hubs, By Region (US$ M, annual growth, percent of worldwide total, CAGR)
Table 30. Number Of Cable TV QAM Distribution Hubs Upgraded, By Year, By Region (number in units, annual growth, percent of total, Compound Annual Growth Rate)
Table 31. Typical Cost Per Upgraded Cable TV QAM Distribution Hub – North America (Broadcast QAMs, On-Demand QAMs, Data QAMs, annual value per hub)
Table 32. Typical Cost Per Upgraded Cable TV QAM Distribution Hub – Europe (Broadcast QAMs, On-Demand QAMs, Data QAMs, annual value per hub)
Table 33. Typical Cost Per Upgraded Cable TV QAM Distribution Hub – Asia (Broadcast QAMs, On-Demand QAMs, Data QAMs, annual value per hub)
Table 34. Typical Cost Per Upgraded Cable TV QAM Distribution Hub – ROW (Broadcast QAMs, On-Demand QAMs, Data QAMs, annual value per hub)
Table 35, Typical Cost To Outfit Upgraded Cable TV QAM Distribution Hubs, By Region (US$M, annual growth, percent of worldwide total, CAGR)
Table 36. Annual Value Of Outfitting Upgraded Cable TV QAM Distribution Hubs, By Region (US$ M, annual growth, percent of worldwide total, CAGR)
Table 37. Annual Value Of New And Upgraded QAM Cable TV Distribution Hubs, By Region (US$ M, annual growth, percent of worldwide total, CAGR)
Table 38. Worldwide Annual Value Of Outfitting New And Upgraded Digital Video Headends, By Category (US$ M, annual growth, percent of worldwide total, CAGR)
Table 39. Value Of New And Upgraded Digital Video Headend Equipment, By Category – North America (annual value, US$ M, annual growth, percent of regional total, CAGR)
Table 40. Value Of New And Upgraded Digital Video Headend Equipment, By Category – Europe (annual value, US$ M, annual growth, percent of regional total, CAGR)
Table 41. Value Of New And Upgraded Digital Video Headend Equipment, By Category – Asia (annual value, US$ M, annual growth, percent of regional total, CAGR)
Table 42. Value Of New And Upgraded Digital Video Headend Equipment, By Category – ROW (annual value, US$ M, annual growth, percent of regional total, CAGR)
Table 43. Value Of New And Upgraded Digital Video Headend Equipment, By Region (annual value, US$ M, annual growth, percent of regional total, CAGR)
Table 44. HP Partners For Content Delivery Partners
Table 45. HP Content Management Partners

List of Figures

Figure 1, How "Content" Moves From Originator To Network Infrastructure
Figure 2. Close Ties Between Content Management Service And Network Infrastructure
Figure 3. Major One-Way TV Delivery Services That Go To Consumer Electronics End-Points That Are Available At Retail (Satellite TV, over-the-air Terrestrial TV, future on-line DVDs and Games)
Figure 4. TV Delivery Services With A Broadband Return Path That Go To A Special Set Top Box That Must Be Obtained From The Network Service Provider (Digital Cable TV, IPTV and Telco-TV Services via DSL or Fiber, Fixed Wireless Services – including WiMAX)
Figure 5. The Internet And Private IP Networks Are A “Wild Card” That Permits "Content" From TV Services To Go To Fixed or Mobile PCs and Devices (The Internet lets "Content" flow to Personal Computers, Mobile Devices and Video-Enabled Cell Phones)
Figure 6. Mobile TV Services Will Is Being Delivered To Mobile Media Devices, Vehicles, Video-Enabled Cell Phones, And Other Personal Video Platforms (The Internet and private networks will enable the delivery of Broadcast TV programming to mobile media devices, vehicles and video-enabled cell phones)
Figure 7. Overview of Electronic Entertainment Sources For Consumers
Figure 8. Estimated Worldwide Households Receiving A Digital TV Service (number of households in millions)
Figure 9. Annual Value Of New And Upgraded Super Headends, By Region (annual value in US$ Millions)
Figure 10. Annual Value Of New And Upgraded Local Headends, By Region (annual value in US$ Millions)
Figure 11. Annual Value Of New And Upgraded IPTV Distribution Hubs, By Region (annual value in US$ Millions)
Figure 12. Annual Value Of New And Upgraded QAM Cable TV Distribution Hubs, By Region (US$ Millions)
Figure 13. Worldwide Annual Value Of Outfitting New And Upgraded Digital Video Headends, By Category (US$ Millions)
Figure 14. Value Of New And Upgraded Digital Video Headend Equipment, By Category – North America (annual value, US$ Millions)
Figure 15. Value Of New And Upgraded Digital Video Headend Equipment, By Category – Europe (annual value, US$ Millions)
Figure 16. Value Of New And Upgraded Digital Video Headend Equipment, By Category – Asia (annual value, US$ Millions)
Figure 17. Value Of New And Upgraded Digital Video Headend Equipment, By Category – ROW (annual value, US$ Millions)
Figure 18. Value Of New And Upgraded Digital Video Headend Equipment, By Region (annual value, US$ Millions)
Figure 19. Universal Workflow Management Solutions Are Unique To The Wide Range Of Harris Capabilities

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